- GBP/JPY gains some positive traction on Monday, though the upside remains limited.
- A combination of factors undermines the safe-haven JPY and lends support to the cross.
- Traders, however, seem reluctant ahead of this week's key data/central bank event risks.
The GBP/JPY cross kicks off the new week on a positive note, albeit lacks follow-through buying and remains confined in Friday's broader trading range. Spot prices trade around the 183.00 round figure, near the 50-day Simple Moving Average (SMA) during the Asian session and remain well within the striking distance of a five-week low touched last Thursday.
The Japanese Yen (JPY) continues with its relative underperformance in the wake of expectations that the case for an imminent shift in the Bank of Japan's (Bo) dovish stance is still not very strong. This, along with a generally positive tone around the equity markets, is seen as another factor denting the JPY's safe-haven status and acting as a tailwind for the GBP/JPY cross. That said, the recent comments by BoJ Governor Kazuo Ueda fueled speculation that the Japanese central bank could move away from ultra-loose policy.
In an interview with Yomiuri newspaper earlier this month, Ueda said that ending negative interest rates is among the options available if the BoJ becomes confident that prices and wages will keep going up sustainably. Apart from this, diminishing odds for more aggressive policy tightening by the Bank of England (BoE) further contribute to capping the upside for the GBP/JPY cross. In fact, BoE Governor Andrew Bailey had told lawmakers that the central bank is now "much nearer" to ending its run of interest rate increases.
Moreover, reviving recession fears and signs that the UK labour market is cooling could put pressure on the BoE to pause its rate-hiking cycle. Traders also seem reluctant to place aggressive bets and prefer to wait on the sidelines ahead of this week's key data/central bank event risks. The UK consumer inflation figures are due for release on Wednesday, which will be followed by the crucial BoE monetary policy meeting on Thursday. This will influence the British Pound and provide a meaningful impetus to the GBP/JPY cross.
The market attention will then shift to the BoJ monetary policy update on Friday, which could infuse volatility around the JPY pairs. This might further assist investors in determining the next leg of a directional move for the GBP/JPY cross. In the meantime, spot prices seem more likely to consolidate in a range in the wake of a Japanese holiday and absent relevant market-moving economic releases from the UK on Monday.
Technical levels to watch
|Today last price||183.02|
|Today Daily Change||-0.05|
|Today Daily Change %||-0.03|
|Today daily open||183.07|
|Previous Daily High||183.92|
|Previous Daily Low||182.78|
|Previous Weekly High||184.39|
|Previous Weekly Low||182.52|
|Previous Monthly High||186.77|
|Previous Monthly Low||180.46|
|Daily Fibonacci 38.2%||183.48|
|Daily Fibonacci 61.8%||183.21|
|Daily Pivot Point S1||182.6|
|Daily Pivot Point S2||182.12|
|Daily Pivot Point S3||181.46|
|Daily Pivot Point R1||183.73|
|Daily Pivot Point R2||184.39|
|Daily Pivot Point R3||184.87|
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.